1. The goal of investing is to gradually build wealth over an extended period of time through the buying and holding of a portfolio of stocks, baskets of stocks, mutual funds, bonds and other investment instruments.
2. Trading is a method of holding stocks for a short period of time. It could be for a week or more often a day!
3. Stock trading is the regular selling and buying of stock, currency and commodities with the aim of spawning profits.
4. Leverage:
Trading:
Yes – Very Frequently
Investing:
Never or in a limited capacity
5. Investors often enhance their profits through compounding, or reinvesting any profits and dividends into additional shares of stock.
6. While investors may be content with a 10 to 15% annual return, traders might seek a 10% return each month.
7. Simply, trading is skill of timing the market where as investing is an art of creating wealth by compounding interest and dividend over the years by holding quality stocks in the market.
8. Type of Play:
Trading:
e.g. Momentum Play
Investing:
Research Drive/Investment Thesis60
9. Positioning Long/Short?
Trading:
Long, Short, or a combination of both
Investing:
Typically long, however there are exceptions
10. Trading comparatively involves higher risk and higher potential returns as the price might go high or low in a short while.
11. Trading is an activity of making money out of your time and your capital.
Investing is a process of making money out of your vision and your capital.
12. Famous sayings“
Trading:
The trend is your friend until it ends”
Investing:
Rule No 1 – don’t lose money; rule number 2 – don’t forget rule no 1
13. Human interaction with portfolio
Trading:
Very high, lots of decision to be made
Investing:
Less, fewer decision to be made
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